Hot dog baron Dick Portillo plows restaurant wealth into real estate

It took Dick Portillo 51 years to grow a single hot dog stand into a $1 billion restaurant empire. His second act, as a real estate investor, is moving much faster.

Portillo, 76, who sold his Portillo's Hot Dogs chain to private-equity firm Berkshire Partners in 2014, has been pouring much of his wealth and time into retail, apartment and industrial properties. In less than two years, he has invested more than $350 million in 8.5 million square feet of real estate throughout the country. And he's still shopping for more.

That's a long way from the 6-by-12-foot hot dog stand Portillo opened in Villa Park in 1963. The Dog House, which had no running water, was launched with $1,100 in savings that his wife, high school sweetheart Sharon, had earmarked for “a house with a white picket fence,” Portillo says.

The sale of Portillo's represented the culmination of the American dream for the chain's eponym, the son of immigrants from Mexico and Greece.

Yet even after he achieved a level of wealth that was hard to conceive of while he was enlisted in the U.S. Marine Corps or working physically taxing jobs in the pre-hot dog days, retirement doesn't interest Portillo. “I love the challenges and excitement of business,” he says. “I've never been on a golf course, never picked up a club.”

Portillo runs his family's investments out of an Oakbrook Terrace office tower with a view of the Chicago skyline in the distance.

He isn't completely out of the food business. Portillo still serves as a paid consultant to the Portillo's chain. He also is an investor in other restaurants, including Gibsons Bar & Steakhouse in Oak Brook and Lettuce Entertain You restaurants in and around Washington, D.C.

Three area locations of Honey-Jam Cafe and one Luigi's House—brands created by Portillo but not part of the sale to Boston-based Berkshire Partners—are leased out to operators of those businesses, he says.

Portillo also owns stocks and is doing due diligence on a potential investment in a private-equity firm, he says.

But passive investments don't tickle his entrepreneurial spirit. “To me, the stock market is not exciting,” Portillo says. “I've always been hands-on. I don't like to spend a lot of time behind a desk.”

NATIONAL PORTFOLIO

Portillo, who got his start in real estate by developing shopping centers for some of his restaurants, now owns apartment properties in Texas, Florida, Georgia and Kentucky, with more than 2,200 units combined. He also owns shopping centers in Oswego, Elgin, Bolingbrook, Indianapolis and Fridley, Minn., and almost 4 million square feet of warehouses in Indianapolis.

Portillo also has backed daughter-in-law Gina—whose chocolate cake recipe is the one used at Portillo's—in buying, rehabbing and selling large homes. They've flipped two homes in Hinsdale and are working on another in the western suburb, plus two in Naples, Fla., where Portillo owns a home.

AIn one of his largest deals, six months after selling his restaurant chain, Portillo paid $100 million for 18 buildings in Illinois and two in Arizona that Portillo's is leasing back.

In another big portfolio deal, he backed BlueRoad Ventures' $139 million acquisition of 48 single-tenant retail buildings in 18 states, including seven in the Chicago area. He is chairman of BlueRoad, a newly formed Chicago firm.

“He was the decision-maker behind where to put Portillo's locations, so he understands the cliche about location, location, location,” says Tim Farrell, managing partner at BlueRoad.

Portillo isn't the first businessman to gravitate to real estate. The industrialist Crown family, Coca-Cola bottling magnate Marvin Herb, multibillionaire money manager John Calamos Sr., former CDW CEO Michael Krasny and Chicago trader Don Wilson are among those who have invested heavily in real estate using profits from other endeavors.

Although it comes with risk, real estate has a natural allure for entrepreneurs who like being part of the action, says Convergint Technologies co-founder Dan Moceri. He now develops downtown apartment towers with architect-turned-developer Thomas Roszak.

“The neat thing is, you see the fruits of your labor,” says Moceri, who remains executive chairman of Convergint but no longer runs the day-to-day operations of the Schaumburg-based security and fire safety systems integrator. “If you're an entrepreneurial person, building a building brings great satisfaction.”

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